Australia is a paradox of isolation and connectivity. As a lone geography located between the Indian Ocean and the South Pacific Ocean, this former British colony is the smallest continent in the world. Globalization has not failed to weave the island into its tapestry, and the country’s hermetic remoteness is juxtaposed with a global mosaic of cultures and peoples. Its multihued landscape of deserts, tropical rainforests, beaches, mountains and coral reefs lends charm to this island-continent.
Australia is derived from the Latin ‘Terra Australis Incognito ,’ which means the Unknown Southern Land. During the 18th century, Britain was split apart by the Industrial Revolution, driving thousands to the cities. Crime soon became a necessity for the underdogs and prisons overflowed. The solution was Botany Bay, Australia, an island that had hardly come under human eyes. In 1788, thousands of convicts disembarked onto the island. The majority were poor, illiterate and driven to petty theft and other small capers. Botany Bay became home to not just British and Irish prisoners, but surprisingly to American, Chinese, Indian, French and Africans as well. It is estimated that 22% of Australia’s population today has a convict ancestor.
Today, Australia’s true inhabitants, the aborigines, have dwindled. The aborigines numbered a few 100,000 before the country was reined in under the British thumb, but after two centuries, they now make up a marginal 2% of the population. The rest of the 98% comprise the transient émigrés – the Europeans and Asians. The territory has been home to the aborigine for at least 50,000 years but in an ironic twist, they gained their full citizenship only in 1967.
|Australia and the World|
|Nominal GDP ($)Nominal GDP: Gross Domestic Product (GDP) is the value of a nation’s output of goods and services during a period. Nominal GDP is unadjusted for inflation or relative purchasing power. Source of data: The World Bank||821.7 billion|
|GDP RankGDP Rank: Position among all nations, in terms of Nominal GDP. Source of data: The World Bank||15/185|
|Per Capita GNI ($)Per Capita GNI: Per Capita Gross National Income (GNI) is the value of a nation’s output of goods and services, together with net income received from abroad, per person. Source of data: The World Bank||35,960|
|Per Capita GNI RankPer Capita GNI Rank: Position among all nations, in terms of Per Capita GNI. Source of data: The World Bank||28/209|
|Population RankPopulation Rank: Position among all nations, in terms of total population. Source of data: U.S. Census Bureau||54/226|
|Geographical Area RankGeographical Area Rank: Position among all nations, in terms of total land area. Source of data: The CIA World Fact Book||6/250|
|Global Competitiveness RankGlobal Competitiveness Rank: Position among all nations in terms of competitiveness, as ranked by World Economic Forum.||18/130|
|Economic Freedom Index RankEconomic Freedom Index Rank: Position among all nations in terms of economic freedoms, as ranked by The Heritage Foundation.||4/157|
|Human Development Index RankHuman Development Index Rank: Position among all nations in terms of overall human development, as ranked by United Nations Development Program||3/177|
|Major Industries||Automotive, Mining, Food Processing, Chemicals, Wool|
This was also the time of the ‘bridgehead economy’1 when land grants were authorized for senior officials and agriculture thrived. With more convicts pouring in, the skill pool increased to include traders, artisans and clerks. Local manufacturing and construction industries began to flourish apart from agriculture to meet the needs of the growing population. Rapid progression gave rise to the establishment of free colonial societies. By the 1850s, five colonies – New South Wales, Western Australia, South Australia, Queensland and Victoria – formed the basis of today’s Australia. In the late 1880s, nationalist sentiment reached a jingoistic peak, leading to the formation of the Commonwealth of Australia in 1901. The new Federal government was given free will and powers overseen by the Crown. Years of racism and discrimination after the exit of the colonizers have now given way to more benevolent policies. A controversial directive was the White Australia Policy, enacted in 1901 during the forming of the Federation of States. This aimed at restricting the entry of immigrants from Asian countries. In those times, entrants into the country were selected on a variety of desirable factors. This extremely colored policy was abandoned in 1972.
Integrating into the global scene has always been easy for Australia. Its flexible and complaisant attitude, especially with regard to women, was evident as far back as 1894 when South Australian women were granted the right to vote, even before the formation of the federation. In 1903, they exercised their rights for the first time in a national election. Today, Australia is one of Asia-Pacific’s richest democracies. The country, known officially as the Commonwealth of Australia, functions as a federal constitutional monarchy under a parliamentary democracy. The head of state remains Queen Elizabeth II, represented by Governor-General Quentin Bryce. Current Prime Minister Kevin Rudd swept to power leading the Labor Party, ending almost 11 years of consecutive rule by the Liberal rule.
Australia’s society is shaped by its immigrants. As a result, the island is a confluence of Aborigine, Western and Asian cultures. But at its heart, Australia has a unique culture of its own. Warm and sunny weather throughout the year has fostered an outdoor loving and sporty population, with 23.5% of Australians over the age of 15 regularly participating in organized sporting activities such as cricket and rugby. Surfing is one of the most popular activities and people take pride in their surfing expertise. As well, Australians take to the mountains, trekking up the trails and exploring the terrain. These same rugby crazy, surf loving, adventurous Australians can be found lounging in a hammock with a chilled beer. But then that is the mark of a true Australian- serene and dynamic.
This dynamism is expressed in the Australian forward-thinking mindset and spirit of innovation. A well educated society, Australia now ranks third in the world in human development, higher than all other English speaking nations. Whether it is the National Gallery of art or the architecturally significant Sydney Opera House, the typical Australian personality is expressed with a liberal and broadminded outlook, which absorbs the world like a sponge and accepts its varied ways.
The smallest continent in the world made an early impression with the establishment of a distinct and integrated Australian market in 1901. Inter-colonial tariffs were repealed. Population growth was encouraged since the 19th century as it was considered an aid to economic development. Australia was transformed by immigrants, from the dust and remains of war into its avant-garde presence of today. At the end of World War II, Australia’s exports primarily consisted of wool, wheat, coal and metals. However, the World Wars boosted manufacturing helping to drive the economy. Production of automobiles, chemicals and electrical and electronic equipment carried on in full earnest. Huge deposits of natural resources in Australia’s kitty included gold, prompting the great Gold Rush. Today, it is still the natural resources that form the backbone of the Australian economy. These natural assets along with wool later became key products for exports.
But privatization began bringing in sweeping changes during the 1980s, which culminated in the country being firmly entrenched in today’s global capitalist economy. Being a polyglot further eased trade relations to its advantage. Australia is flush with a feel good factor by offering both Western and Asian business environments.
Trade relations were further eased when the long dormant banking scene in Australia woke up to the world. Traditionally, the banking sector in Australia has been tightly regulated. Until the 1980s it was nearly impossible for a foreign bank to set up its branch. In 1983 the Australian financial industry began to open up and the then Treasurer, Paul Keating, deregulated the system by granting licenses to foreign banks and floating the Australian dollar.
Australia has always handled globalization with aplomb. Historically, Australia has endeared itself to New Zealand and Papua New Guinea, its adjacent companions. One of the first major steps that the island took towards embracing the world was when it signed the Australia and New Zealand Army Corps (ANZAC) pact in 1944.
Australia’s strategic location has enabled the country to maintain amiable relationships with the Asia-Pacific region, an area of the world that commands a top priority in its foreign and trade policies. The island-continent has maintained good ties with its closest neighbors, which are Japan , Indonesia and China, and of course with the U.S. It has also established free trade deals with the Association of Southeast Asian Nations (ASEAN).
The Gold Rush in the 19th century drew a huge influx of Chinese, among other Asians. Today, Asians are an integral part of the societal framework and account for 6% of the 20 million population. The sheltered island managed to transform its once isolated market into one that now takes advantage of its vibrant and high powered Asian neighbors, especially China.
Australia’s meteoric development was facilitated by China’s perpetual demand for iron ore, coal and aluminum, to keep its factories running. Japan is Australia’s largest export market, accounting for $32.4 billion in the 12 months to the end of April 2008. This is followed by China ($25.1 billion), Korea ($13.4 billion) and the U.S. ($10.3 billion). Although now mining forms a minimal percentage of Australia’s economy and Japan has overtaken China as Australia’s most important coal customer, China is still on the island’s priority list. Currently, this economic joust is in China’s favor. Chinese state investment funds are buying into Australian resource companies, making the island’s business communities nervous. Years of racism and discrimination after the exit of the colonizers have now given way to more benevolent policies. A controversial directive was the White Australia Policy, enacted in 1901 during the forming of the Federation of States. This aimed at restricting the entry of immigrants from Asian countries. In those times, entrants into the country were selected on a variety of desirable factors. This extremely colored policy was abandoned in 1972.
Australia’s rags to riches story is touching. With 16 years of consistent growth, the former felon stronghold was voted the most resilient economy in the world by the IMD World Competitiveness Yearbook. The country’s economy is 82% free, making it the world’s fourth freest economy, according to the Index of Economic Freedom 2008. Consistent high productivity and a feverish increase in exports are qualities that have set Australia apart in the past ten years. Although manufacturing has been declining steadily, it still accounts for around 10% of GDP. The automotive industry is one of the most important contributors to Australia’s economy, particularly in relation to employment, exports and innovation. This industry has undergone extensive reform, especially since 1985 when the quotas and tariffs were removed, making the automotive industry more internationally competitive. In 2007, exports of automotive products surged $4.7 billion, placing the industry among Australia’s top 10 export earners. In fact, this places the sector above some of Australia’s more traditional exports such as wine, wheat and wool. However, the Australian market is extremely competitive, with more than 60 models available for the consumer’s preference. The textile, clothing and footwear (TCF) industries of Australia are also an important component of the economy. Although the value of TCF industry output, including wholesale and retail, has declined in recent years, they still are worth $7.5 billion, employing more 158,600 workers. However, Australia’s TCF output is less than 0.5% of global production, well below countries such as China or Hungary where TCF represents a higher percentage of manufacturing activity.
Most of its GDP is derived from the services sector, which includes the wholesale and retail trade, personal services, and tourism. This sector accounts for almost 80% of the GDP.
The island’s natural scenic beauty and its sun-bleached beaches, attract tourists in droves every year. Western Australian tourism has boomed in 2007. According to figures from Tourism Research Australia, visitor spending touched $4.4 billion during the year ending September 2007. The Australian government too has committed $193.3 million in tourism over the next four years.
Ranked third on the Human Development Index, Australia has a life expectancy at birth of 80.9 years with a low infant mortality rate of five for every 1,000 live births. Fertility rates are increasing, as evinced by 285,200 births registered in Australia in 2007, the highest ever, giving Australia a total fertility rate of 1.93 babies per woman, the highest since 1981.
However, not all is sunny – a booming economy and high standards of living do cast their shadows. Australia’s economy is dappled with wrinkles of an aging population, the impact of which has been felt in the workforce and employment scenarios. Worryingly, a recent study by the National Survey of Mental Health and Wellbeing showed that one in five Australians aged 16-85 years, or around 3.2 million people suffered from a mental disorder in 2007. With stress placing increasing pressure on the government’s healthcare resources, the government would need to tackle adequately the strains that its citizens are facing. Environmentally, the ratification of the Kyoto Protocol in 2007 brought about a policy shift, and Australia is committed to reducing greenhouse gas emissions by 60% in 2050 from the 2000 level. Australia is chronically drought-prone, and better water management is essential to halt the over-exploitation of water resources, especially in rural areas, and improving urban water supply.
The country’s commodity-driven economy is currently buoyed by China’s stellar performance. In fact, commodity export earnings are expected to increase by 40% to $212 billion in 2008-09. However, worrying is the fact that commodity prices may have peaked in 2008, as evidenced by a more than 40% drop in spot prices for coal and iron ore recently. Coupled with a weak Australian dollar, this might slow production, growth, investment and employment opportunities across this crucial sector. For bulk exporters, significant risk arises from a slowdown in demand from giants such as China and Japan. Certain sectors such as hospitality and tourism might be affected by a flat inbound and domestic tourism.
Immigration is an important contributor to labor supply. However, much of it is concentrated in urban areas, and one of the challenges for Australia is to attract immigrants to non-urban areas where they are most needed.
Economists expect that despite turbulence in international markets in 2008 (described by the International Monetary Fund (IMF) as the “largest financial shock since the Great Depression),” growth might be cushioned by the prospects of growth in Asia and other developing regions. In response to concerns over a slowing economy, the Reserve Bank of Australia (RBA) in September 2008, slashed interest rates for the first time in seven years by 25 basis points to 7%. For the June quarter, the Australian economy expanded at the weakest pace in more than three years with growth rising by 0.3% from the previous quarter. GDP also grew 2.7% for the same quarter compared to a year earlier. The economy is expected to grow at just around 2.8% in 2008, influenced by the unprecedented global financial turmoil. Inflationary pressures remain high in a turbulent year – as inflation for 2008 jumped to a high of 5% in the year to September. In response to the global credit crunch, the Australian government and the RBA undertook a number of positive steps. The government hastened to assure a general guarantee of deposits, and also decided to guarantee wholesale debt obligations of Australian deposit-takers as well as Australian branches of foreign banks, on commercial terms. Australian banks, the RBA has maintained, have very little direct exposure to the sort of debilitating financial losses that have crippled many overseas financial institutions. The government also announced a stimulus package of $10.4 billion worth around 0.9% of the GDP. Part of this package, around $8.7 billion, includes direct payments to pensioners and families.
The advent of globalization has stirred up the ingredients of this society leaving no dregs at the bottom. Today, Australia is one of the most urbanized countries in the world and its population is concentrated around the main cities, leaving the “outback” largely deserted. Indeed, Australia performed strongly in the Economist Intelligence Unit’s livability report for 2008 with four cities, Melbourne, Perth, Adelaide, and Sydney ranking within the top ten cities. For a country that is one of the driest on the planet, ten years of drought have brought about an urgent need for water conservation. Australians are among the highest per capita consumers of water in the world. Climatic changes such as global warming have exacerbated Australia’s problems.
The face of 21st century Australia mirrors an intricately layered landscape. Cricket and sushi, surfing and jewelry, history and technology, beer and art are some of the totemic oxymorons that form the core of this continent. This once segregated, sleepy packet of history and beauty has now transformed into a bustling market full of global citizens.
: A term used by N.G. Butlin, one of Australia’s well known economic historians. The term referred to the early stages of British occupation when Australia was mainly a penal colony.
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